Production could save Israel billions of dollars in annual costs and eventually turn country into an energy exporter.

Natural gas from the Tamar field off Israel's Mediterranean shores has started flowing, the first step towards Israel possibly becoming an energy-exporting country within the next few years.

The discovery in 2009 led to an exploration frenzy in the Levant Basin - shared between Israel, Cyprus and Lebanon - and the uncovering of a second bigger find, Leviathan, which prompted Israel to set up a natural gas wealth fund. Tamar alone is expected to meet the country's natural gas needs for decades.

"Today [we begin] independence in Israeli natural gas. It is an enormous achievement for the Israeli economy and the start of a new era," said Israeli billionaire Yitzhak Tshuva, the controlling shareholder in Delek Group, one of the partners in Tamar on Saturday.

The gas should lead to a reduction in production costs for state utility Israel Electric Corp., as well as a decline in the price of electricity, the Israeli water and energy ministry said last week.

A statement from the production partners, who said they had invested $3bn in developing Tamar, estimated the new gas supplies would save Israel's economy, which relies heavily on oil imports, $3.6bn per year.

Texas-based Noble Energy holds 36 percent of Tamar.

'Energy sector'

Charles Davidson, Noble's chairman and CEO, said bringing Tamar to production in four years was a "transformational achievement" and that the field's partners would now work to invest in increasing piping capacity.

"Building on this success, we will work with our partners and the government to sanction the next phase of development at Tamar and the domestic phase of Leviathan," Davidson said.

Israeli prime minister Binyamin Netanyahu highlighted the achievement in a statement issued by his office.

"We are taking an important step towards independence in the energy sector. In the past decade we have promoted Israel's gas sector and this will enhance Israel's economy and benefit all the country's citizens," he said.

Tamar is located 90km off Israel's northern coast and has an estimated 10 trillion cubic feet of gas.

Development of Tamar and Leviathan will make Israel less dependent on energy imports, but the country has said it will also allow a significant amount of its natural gas to be exported.

Tamar has already signed a number of large deals, including one to supply as much as $23bn of natural gas to Israel Electric Corp. and $4bn worth to units of conglomerate Israel Corp.